Google Fails To Meet Expectations In First Quarter

In the first quarter, Google reported earnings and revenue that were well short of analysts’ expectations. Earnings per share missed by 12 cents and revenue came in $100 million short of what was expected. For the quarter that ended March 31, Google reported revenue of $15.42 billion, up 19 percent from the first quarter of 2013. However, analysts had expected revenue of at least $15.52 billion. Earnings per share came in at $6.27, less than analysts’ expectations of $6.39 per share.

In recent years, Google has earned less on its ads as more Internet users migrate to mobile devices. The average cost per advertising click has fallen nearly 9 percent from the first quarter of 2013. Conversely, the company is projected to increase its digital ad revenues this year by more than $5 billion. According to eMarketer, Google currently accounts for about 32 percent of digital ad spending, up from 31.3 percent in 2012.

In the news release announcing the company’s results, Google’s chief executive Larry Page called it “another great quarter.” He added, “We got lots of product improvements done, especially on mobile.” Google has also made great strides in other areas of the tech industry.

Recently, Google has been on a buying binge, acquiring companies that seem to have little to do with its core business of Internet search and advertising. The company has acquired several robotic companies in the past few months. Its new holdings include Boston Dynamics, maker of mechanical creatures; Nest Labs, developer of an innovative thermostat, and Titan Aerospace, which makes drone satellites.

Wall Street has applauded these acquisitions as part of a long-term strategy to develop new markets. However, some analysts are questioning the purchases. Colin Gillis of BGC Partners wrote in a research note, “While one might say that it’s a natural fit for Google to have a robot army, we question how owning these businesses inside Google make sense.”